Policy and Politics

Main Menu

The Low-Wage Future

Awhile back I wrote about the emergence of an hourglass economy in the United States. That is an economy where job growth, especially urban, is increasingly split into dual-service sectors; high status service jobs creating demand for a lot of low status service jobs and accompanied by shrunken middle-income opportunities. In particular I highlighted some work by Josh Lehner from the Oregon Office of Economic Analysis on an increasingly bifurcated labor market. Included in that post was this graph:

That was the picture up through 2012 in terms of percentage growth, but how might the future look in terms of raw employment growth? Well last month the Bureau of Labor Statistics published their employment projections for occupations through 2022 and it doesn’t appear as though the trend, or at least the lower end of the hourglass, identified by Lehner and others is going to change.

Danielle Kurtzleben has a good breakdown of the report, and arrives at a similar conclusion: “The Job Openings of the Future will Largely be Low-wage.” She took the data from occupations with the most projected job openings and produced this graph, broken down by median income quintile:

Definitely click through to read the rest of Kurtzleben’s piece, including the well-received caveats about these projections. In short, the BLS has been wrong before (i.e., prior predictions that didn’t include the disastrous 2008 recession), but in the all-things-being-equal realm of imagining the future I’m sure the details wouldn’t change significantly.

Those numbers are derived from the projected job openings due to growth and replacement needs. Looking elsewhere in the BLS report yields similar results. In Table 5, “Occupations with the most job growth,” you’ll find 30 occupations altogether, including their median annual wage from 2012. Here are the top ten, in terms of absolute projected change, and their respective 2012 median income:

As you can see only one occupation, Registered Nurses, crosses the threshold of the second-lowest income quintile — where the average wage is $29,696. Taken altogether, three occupations have median annual wages above $70,000 (but below six figures) while four hold wages between $50- and $70,000. Eight of the occupations earn medians of between $30- and $50,000. A total of 15, or half of the occupations, currently have median incomes below $30,000. Over 73 percent of the top 30 occupations of the future currently pay median wages below the national average.

To write that this employment outlook has policy implications is, to be charitable, an understatement. We’re already at a point where someone like the CEO of Family Dollar recognizes “a growing [income] bifurcation in households.” So the future may very well require thinking a bit outside the contemporary policy box — for bothsides.